Corporate Finance Commons^™

Betting On The Market: The Influence Of Match-Day Odds On Price Reactions Of European Football Clubs, Pascal Alterauge, Marc Mehlhorn

Journal of Banking and Financial Economics

This research investigates the relationship between football match outcomes, betting odds and the stock prices of publicly traded European football clubs, spanning from 11 February 2004 to 7 April 2022. Drawing data from 12 major European and publicly traded clubs, the study utilised betting odds as a key metric. These odds, aggregated from the Odds Portal, serve as a gauge for expected versus unexpected match outcomes. Preliminary findings showed a market value increase of 0.44% after a win and a decrease of 1.08% post-defeat. Moreover, deviations from betting odds predictions significantly influenced stock prices, with unexpected wins and losses resulting …

Optimal Empirical Strategy For Deriving The Spot Curve: The Case Of Poland, Piotr Bartkiewicz

Journal of Banking and Financial Economics

We use a proprietary dataset of daily quotations of individual bonds from the period 2005–2018 to assess the appropriateness of three common yield curve intrapolation methods: Nelson-Siegel (NS), Diebold-Li (DL) and cubic splines. Spot (zero-coupon) yield curves derived from the methods are used to price all securities in the sample in both in-sample and out-of-sample settings. The results highlight trade-offs inherent in any empirical strategy: between flexibility and in-sample fit, between overall fit and fit in particular segments of the curve. We look at both in-sample and out-of-sample. Cubic splines offer the best in-sample fit, but out-of-sample results indicate that …

European Union Sanctions Impact On The Sector Stock Prices – The Ukrainian War Effect?, Patrycja Chodnicka, Piotr Jaworski, Marcin Kot

Journal of Banking and Financial Economics

The aim of this paper is to analyze the current impact of the implementation of the European Union sanctions related to the Ukrainian War on the abnormal rates of return on the stock prices of companies listed on the stock exchanges. It was hypothesized that the implementation of the European Union sanctions related to the Ukrainian War is causing the varied abnormal rates of return on the stock prices of companies listed on the stock exchanges, taking into consideration the type of sector and the geographical proximity to the military conflict. The analysis used panel data event studies prepared using …

Expansionary Federal Monetary Policy And U.S. Banks’ Risk Profiles During The Covid-19 Pandemic-Induced Economic Recession, Maoyong Zheng, Cesar Escalante

Journal of Banking and Financial Economics

This study focuses on the pandemic phase when the U.S. economy dealt with significant economic recessionary pressures due to widespread, prolonged social mobility restraints. The Federal Open Market Committee (FOMC) promptly pursued expansionary policies, such as lowering the federal funds rate to almost zero until February 2022. This study employs a Dynamic Panel Data Generalised Moment Method Model (DPD-GMM) to analyse the impact of the COVID-19 pandemic’s economic shocks and FOMC’s expansionary policy on U.S. banks’ loan portfolio and asset complement risk profiles. Our analysis extends from two pre-pandemic years through the pandemic recession and recovery periods (until early 2022) …

Indirect Measure Of Financial Constraints: Evidence From Unquoted Innovative Smes, Katarzyna Prędkiewicz

Journal of Banking and Financial Economics

This paper examines whether companies’ innovativeness affects the availability of capital and, therefore, whether this group is financially constrained. It uses an objective, indirect way of measuring financial constraints based on the assumption that financially restricted firms only invest when internal cash flow allows them to do so. Therefore, the research was based on the investment-cash flow equation, more precisely the adjusted ECM model adapted to the SME sector. The companies’ innovativeness was measured based on a proprietary synthetic indicator covering a broad range of information on innovation activity. The research was conducted on a sample of 403 firms, including …

Journal Of Banking And Financial Economics 2024, 2(22)

Journal of Banking and Financial Economics

Journal of Banking and Financial Economics 2024, 2(22)

International Diversification And Stock-Price Crash Risk, Alireza Askarzadeh, Mostafa Kanaanitorshizi, Maryam Tabarhosseini, Dana Amiri

Finance Faculty Publications

Despite the recent proliferation of research on internationalization, little attention has been paid to understanding the reasons behind the decrease in firm value accompanying international expansion. By delving into the underlying mechanisms and applying the concept of agency theory to a sample of US firms spanning from 2000 to 2022, we posit that an increased level of information asymmetry in internationally diversified firms incentivizes managers to prioritize their own interests. To protect their careers, CEOs of internationally diversified firms often suppress bad news. This behavior can lead to the accumulation of negative news and heighten the risk of a stock-price …

Enhanced Prediction Of Stock Markets Using A Novel Deep Learning Model Plstm-Tal In Urbanized Smart Cities, Saima Latif, Nadeem Javaid, Faheem Aslam, Abdulaziz Aldegheishem, Nabil Alrajeh, Safdar Hussain Bouk

School of Cybersecurity Faculty Publications

Accurate predictions of stock markets are important for investors and other stakeholders of the equity markets to formulate profitable investment strategies. The improved accuracy of a prediction model even with a slight margin can translate into considerable monetary returns. However, the stock markets' prediction is regarded as an intricate research problem for the noise, complexity and volatility of the stocks' data. In recent years, the deep learning models have been successful in providing robust forecasts for sequential data. We propose a novel deep learning-based hybrid classification model by combining peephole LSTM with temporal attention layer (TAL) to accurately predict the …

The Rise Of Private Equity Continuation Funds, Kobi Kastiel, Yaron Nili

Faculty Scholarship

This Article provides the first comprehensive examination of an emerging practice within the private equity sector: continuation funds. Continuation funds break from the traditional private equity model by allowing sponsors to hold on to assets beyond the typical fund term and, instead of selling the assets to third parties, sell them to their own newly established fund. Lauded by the private equity industry as providing “optionality” to investors by allowing them to cash out or roll over, continuation funds have grown to represent a major segment of investment activity in the United States. Despite their surging popularity among private equity …

Expanding Mfw: Delaware Law Should Offer A Business Judgment Rule Safe Harbor For All Conflicted Controller Transactions, Alex Lindsey

Fordham Journal of Corporate & Financial Law

While courts usually defer to a board’s business decisions under the business judgment rule, courts will apply a much less deferential standard of review due to loyalty concerns if a conflicted controller is involved in a business decision such as a merger. However, in Kahn v. M & F Worldwide (“MFW”) when a squeeze out merger was challenged by a minority stockholder, the Delaware Supreme Court reviewed the transaction under the deferential business judgment rule standard because the Court found that the structure of the transaction neutralized the controller loyalty concerns. Building on this reasoning, the Court developed a checklist …

Pricing Corporate Governance, Albert Choi

Articles

Scholars and practitioners have long theorized that by penalizing firms with unattractive governance features, the stock market incentivizes firms to adopt the optimal governance structure at their initial public offerings (IPOs). This theory, however, does not seem to match with practice. Not only do many IPO firms offer putatively suboptimal governance arrangements, such as staggered boards and dual-class structures, but these arrangements have been gaining popularity among IPO firms. This Article argues that the IPO market is unlikely to provide the necessary discipline to incentivize companies to adopt the optimal governance package. In particular, when the optimal governance package differs …

Corporate Finance, Kenneth S. Bigel

Open Touro Created

2023

Corporate Finance is a comprehensive guide covering the three fundamental topics in Corporate Finance, including Capital Budgeting under Certainty, Capital Structure Theory, and Short-term Financial Management and Operating Leverage. In-depth explanations of topics and terms are provided as well as key illustration in the manner of problem sets and solutions, tables, and diagrams. Review problems are also included so that students can conduct self-assessments. This text will be continually updated in order to provide novel information and enhance students’ experiences.

Spacs And The Macroeconomy: An Empirical Examination Of Real Interest Rates' Impact On Spacs, Ryan A. Jacobs

Doctoral Dissertations (DBA)

Special Purpose acquisition companies (SPACs) are an alternative way private entities enter public markets through reverse merger of a publicly listed pool of capital. Price discovery is more transparent than the traditional IPO process, as valuations are negotiated between the SPAC Sponsor and the firm’s management team before shareholders approve through a shareholder vote. I conducted an OLS regression test for a relationship between SPAC activity, using capital invested in SPAC IPOs as a proxy, and various macroeconomic variables. I did not find evidence of a linear relationship. I examined the impact of the real interest rates on monthly pre-merger …

Female Ceos And Investment Efficiency In The Vietnamese Market, Jun Myung Song, Chune Young Chung

Sim Kee Boon Institute for Financial Economics

This paper proposes female CEOs’ overconfidence and risky behavior stem from gender stereotype threats. Using two subsamples from Vietnam—firms in the Northern and Southern regions—we empirically show that female CEOs in the North, where there is less gender stereotyping, tend to overinvest relative to male CEOs. However, in the South, they are indifferent. Additional analysis reinforces the main finding that female CEOs in the North tend to take more risks even when dealing with market volatility and uncertainty (e.g., the COVID-19 pandemic). Such risky behaviors do not deteriorate firm value but, instead, possibly improve firm performance.

How Commonality Persists? (Through Investors' Sentiment And Attention), Chyng Wen Tee, Raja Velu, Zhaoque Zhou

Research Collection Lee Kong Chian School Of Business

Studies on commonality generally attribute the variation in asset returns to the variation in order flows. In this research study, we show that order flows do not predict asset returns, rather their relationship have been static over time. Thus we model both returns and the order flows as endogenous variables, and use investors' sentiment and attention as exogenous factors via a reduced-rank regression. We provide empirical evidence to demonstrate that cross-sectional commonality in attention (sentiment) is linearly (nonlinearly) associated with both returns and order flows at the intraday level, while the sentiment and attention measures themselvesexhibit a nonlinear mutual relationship, …

Monetary Transmission And Government Investment In China, Qian Han, Zhaogang Song, Yufei Yuan, Yuanhang Zhao

Research Collection Lee Kong Chian School Of Business

The quantity measure of money supply—the M2 growth, in particular—has been used as the intermediate target of monetary policy in China since 2000. We document three findings on the transmission of money supply shocks to firm investment and financing over the period from 1998 to 2016. First, positive money supply shocks have significant negative effects on firm investment and do not have consistent impacts on firm financing, contradicting the standard monetary transmission mechanism. Second, using short-term global capital flows as an exogenous money supply factor, we recover the standard positive effect of money supply shocks on firm investment and financing, …

Esg Scores Impact On U.S. Insurance Companies’ Financial Performance, Franceska Xhafa

Doctoral Dissertations (DBA)

This paper examines the impact of Environmental, Social, and Governance (ESG) scores on U.S. insurance companies' financial performance and is among the first to do so. The existing literature has sundry conclusions on whether there is any impact; this study intends to add to the existing literature to elucidate an answer. In this study, the financial ratio, net profit margin, is used as the dependent variable. The ESG score, governance score, and governance metrics such as the number of independent directors on the audit committee, size of the compensation committee, board size, and the number of executives are used as …

An Empirical Investigation Of The Relationship Between Global Copper Prices And Us Industrial Production, Paa Kow Cole

Doctoral Dissertations (DBA)

This research examines the relationship between copper Prices and US Economy proxied by the Industrial Production Index. Copper's physical properties make it suitable for various industrial uses, making it an integrated element of the US economy. Industrial production is one of the leading indicators of gross domestic product, reflecting a country's overall economic performance. Therefore, as an essential input in industrial production, the direction of copper prices is important for the overall economy. We employed the Granger causality and ARDL models to evaluate the relationship between Global Copper Prices and Industrial Production. Using monthly time series data for global copper …

Does Corruption Matter On Corporate Payouts In The Covid Era?, Hasan Tekin

Bulletin of Monetary Economics and Banking

This article investigates how corruption (COR) and the COVID-19 (COV) pandemic affect corporate payout decisions. The sample contains 13,865 firm-years over 2012-2020 and 1,950 firms from 18 Muslim countries. Empirical findings show that neither COR nor COV drives dividends (DIV) and repurchases (REP). However, COV x COR negatively and significantly influences DIV. Namely, firms in highly corrupted Muslim countries have higher DIV during the pandemic–the picture changes in the COVID era. Particularly, firms in higher corrupt countries have higher DIV, which aligns with the substitute model of agency costs, but COR does not affect REP in the pandemic …

Covenant Violation And Operational Efficiency, Hui Liang James, Hongxia Wang, Zhimin Wang

Finance and Economics

We examine the impact of covenant violation on corporate operational efficiency. Using an aggregate measure of operational efficiency developed by Demerjian et al. (Management Science, 58, 2012, 1229–1248), we provide strong empirical evidence that covenant violations hinder firms from achieving operational efficiency. Our finding is robust to alternative definitions of operational efficiency and various model specifications to address potential endogeneity issues. Further analyses show that lower operational efficiency is attributable to covenant-violating firms' under-investments in capital and labour. In addition, the negative effect of covenant violation on operational efficiency is not universally the same, and is less evident in violating …